Incumbents must rebate CAD310m to urban users, roll out CAD421m rural broadband facilities

1 Sep 2010

The Canadian Radio-television and Telecommunications Commission (CRTC) has issued a final ruling forcing incumbent fixed line operators Bell Canada, Bell Aliant, Telus and MTS to pay back CAD311 million (USD293 million) to residential phone customers in urban areas that were overcharged between 2002 and 2006. The regulator also approved a plan for the deployment of fixed broadband internet access to 287 rural and remote communities over the next four years at a cost of CAD422 million, using the remaining funds accumulated from the overcharging. Bell Canada and Bell Aliant plan to jointly connect 112 rural communities in Ontario and Quebec, Telus has promised to cover 159 communities in British Columbia, Alberta and Quebec, and MTS is responsible for connecting 16 communities in Manitoba, according to the CRTC’s press release.

CBC News writes that so-called deferral account funds were begun in 2002 when the CRTC allowed telcos to charge above their usual regulated price caps so that new competitors entering the fixed line market — primarily cablecos such as Rogers, Shaw, Videotron and Cogeco — could undercut them. The deferral accounts grew to around CAD1.6 billion before telcos were permitted to withdraw a portion to lower the wholesale rates they charged resellers such as Primus and Yak to access their networks. In 2008 the CRTC ruled that telcos must spend around half the remaining money — CAD350 million — on expanding rural broadband facilities and improving services for disabled users (with CAD35 million going to the latter project), with the remaining CAD300 million earmarked for rebates to the overcharged urban customers; the total remaining fund has since risen to CAD770 million including interest. Last year the Supreme Court upheld the CRTC’s decision, quashing an appeal from the telcos to spend the entire budget on broadband, whilst also resisting calls from consumer groups to give the full total back to subscribers. The CRTC also rejected proposals from Bell to cover the rural communities with HSPA-based mobile broadband services with a monthly download limit of 2GB, ruling that fixed xDSL connections must be deployed, providing rural customers with comparable data usage limits to urban subscribers. The watchdog previously approved Saskatchewan-based incumbent SaskTel’s proposal to spend the entire funds in its deferral account, around CAD1.5 million, on accessibility initiatives.

Elaborating on details of their wider broadband rollout plans, Bell Canada and Bell Aliant have earmarked investment of CAD170 million in high speed internet and core fibre backbone infrastructure to serve an estimated 95% of residents and businesses in eastern Ontario (around one million potential customers) over the next two years, the federal and Ontario governments announced yesterday. The footprint of the sister telcos’ Ontario project includes the counties of Hastings, Peterborough, Renfrew, Northumberland, Haliburton, Frontenac, Lanark, Prince Edward, Lennox & Addington, United Counties of Stormont, Dundas & Glengarry, United Counties of Prescott & Russell, United Counties of Leeds & Grenville and the city of Kawartha Lakes.